Inflation en-route recovery

‘Spending is rewarding,’ says the advertisement of a bank debit card. The common man has more money in his pocket now. It is the day after budget and this is what Pranab Da said a day earlier in Lok Sabha without putting it in exact words. In his speech dada said that the economy is back on track, but our careful and seasoned Minister did not rush to take back the stimulus. Fiscal reconsolidation is clearly need of the hour, yet the biggest concern for the aam admi is inflation, something that the budget misses at it talks about inclusive growth. The rise petroleum prices were perhaps the least expected announcement. The excise hike hijacked the whole attention and it was protest echoing inside and out side Parliament ignoring the other aspects of the Budget. Though the FM conservatively announced that the hike will add only 0.41 per cent to the wholesale price index based inflation, the overall effect was selectively ignored. The fear is that this hike will seep into other sectors as energy costs raise. The Budget assumes inflation to average close to 4.5 per cent for 2010-11. This is as per the Reserve banks guidelines which says that in ideal conditions inflation should remain at 4.5 per cent in short term (one to two years) and 3 per cent in long term. The roadmap towards achieving this end is uncertain. Inflation is above 8.5 per cent. The food inflation on the other hand is already sky rocketing touching 18 per cent mark. A person who spent 1000 rupees on food last year, spends 1,170 rupees on the same items at present. This hidden tax is costing heavily the lower and lower middle class. Though the budget has given major exemptions in income tax, the benefit is only for the higher income groups. The real sufferers of the hour are those who already had their income below taxable limits. Shashi Ranjan Kumar, a migrant from Uttar Pradesh working at a showroom in Delhi is one of those worst effected by the price rise. With an annual income of 96,000 per year and a family of five to support, Shashi has nothing to cheer for. “Our condition remains the same, the government is talking about aam admi, but tell me what has a common person like me benefited from the budget. We can not even eat properly, leave alone savings,” says a disappointed Shashi. Speaking on price rise a day before, the FM blamed the crisis on “huge cost of intermediation between farm and kitchen” seeking discussion and suggestions from the MPs. The demand and supply gap has been called as the major factor repeatedly by the government; however, the policy gap is clear. It is disheartening for the spirit of a socialist economy to announce its failure in maintaining its distribution system.
In such scenario, the Budget has filled the pockets of the class that can spend. 25 million tax payers earning over 8 lakh rupees a year will save 4,500 rupees per month. This will without any doubt go to the consumer market further raising the demand. The fears that were there before the budget was announced seem to be coming true with some spurt evident on inflation front. On the other hand, increasing the coverage of indirect taxes, government has secured its income as well. Money will also be pumped into banks to encourage lending. The government is on its path of fiscal reconsolidation after giving much relief last year. Relieved from adverse political pressures, this Budget paves a forward way for further liberalization. Yet, any major reformist decision has been restrained from. Noted Economist Swaminathan Ankleshwar Aiyar notes “The aam admi will get more rhetoric than cash.” Huge expenditure on social sector may generate some benefits for the common man, however, with price rise and a failed distribution system, as the government itself accepted, the common man has been left dry.

To speak or not to speak....

Democracy gives freedom of speech. But the largest democracy of the world has created not only free speakers but also free stoppers. Free stoppers are a special category of self proclaimed keepers of culture and tradition. Their definition of culture, irrespective of sociological or even logical realities, is based on their own theories. It is Goondaraj, a dictatorship which is not even challenged by the government. The Shiv Sena, and its younger competitor Maharashtra Navnirmaan Sena, are two parties that need no introduction. They are Mumbai and Maharashtra’s moral, ethical and even social police. They are the ones who decide who should step on the soil of Maharashtra, they decide who is supposed to work their, who can play and also who can speak and what can be said. The recent episode of Sena vs Shahrukh Khan was nothing new. Shahrukh got a chance to play a real life hero, and he did it candidly. The man who calls himself ‘proud son of Delhi’ went open against Sena and MNS war against North Indians. And as if this was not enough for a controversy, Mr Khan went on to support Pakistani cricketers playing for the IPL. Why were not the Pakistani players taken in his IPL team this time is however a question which confuses. Similar comment came from Amir Khan when he supported Pakistani players as well. The Sena called the two Khans ‘two idiots’, but soon Amir was sidelined and Shahrukh took over the whole controversy. It was nothing short of a real life movie which saw comments and counter-comments. India was meanwhile glued to its TV screen for the drama preceding their favourite stars new flick. No doubt both parties came out winners with this controversy. While Shahrukh got a good promotion for his upcoming movie, the Sena got back its lime light which was stolen by the MNS in recent past.
But this is not the only dictat from these free stoppers. The Sena had said that it wont allow either Pakistani or Australian cricketers to play in Mumbai. Any democratic government is supposed to take concrete steps in such situation, so did the Centre. No, it did not take disciplinary or legal action against the Sena, instead, a Union Minister Mr Sharad Pawar along with BCCI President Shashank Manohar went all the way to Sena Supremo Bal Saheb Thackrey to ‘request’ them for allowing Australian Players in the up coming IPL match in Mumbai. The meeting was of coarse successful because the Sena is now cool on the issue. It is an irony but a fact that in India governments and authorities take permission from other political parties before organising a tournament. No doubt the meeting was purely political in nature as Mr Pawar’s growing distances with the Congress is evident. Yet, it is not a healthy sign to have parties with lathi armed goondas ruling the roost in any state.
While the Sena has got most of the blame for spreading differences, the Congress itself is not much behind. The recent Cabinet decision announcing that only ‘Marathi Speaking’ people can drive taxis in the state shocked the whole nation, specially the central government. Though a U Turn came fast and the very next day Gujrati and Hindi were added to the list, the intentions were already clear. Going the ‘Marathi Manoos’ way is the easy route to the vote bank in the state.
But the story isn’t all about wooing locals. The charisma prince of India Rahul Gandhi went on to impress the whole country hitting right when the iron was hot. Rahul condemned MNS and Shiv Sena in Bihar and then came all the way to Mumbai despite the Shiv Sena’s threat that Mumbai does not belong to his Italian mother. This was not all, Rahul went the Gandhi way and travelled in a local train with the commoners. Now, that is one positive propaganda and perhaps a lesson for those who think politics can not be healthy. Moreover, unlike artists and sports stars, politicians are not a soft target; it would have cost the Sena dearly to stir much action against the Gandhi junior.
At the end, Shahrukh Khan and Rahul Gandhi seem to emerge the real heroes braving what even the administration shies from facing. ‘My Name is Khan’ is running through the country despite some small incidents of protest from the Sainiks. It is too early to say if the Sena is getting weak, as it has re-launched its comment and condemn policy. Meanwhile, the biggest threat to Thackrey senior for now remains his estranged nephew Raj. The ultimate result of the war between the two Senas and the Congress is far for now. It is now for us to answer how long we are going to allow regionalism; cast and religion rule our political decisions.